Love thy neighbour: why chancellors and prime ministers often fall out

Jeremy Hunt has been described as “the most powerful man in government” and “de facto prime minister” following his surprise appointment last week.

After the new chancellor axed most of Liz Truss’s mini-budget, the ever-influential power-dynamic between No. 10 and No. 11 Downing Street is back under the spotlight.

While Hunt’s position is seen as exceptionally strong, Truss has shown her power by already sacking one chancellor during her short reign. Prime ministers and chancellors are “rarely the friendliest of neighbours”, said The Guardian, as there is a “history of rivalry”, between them.

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Who really has the power?

There have been many “power struggles between No. 10 and the Treasury”, agreed policy experts Dave Richards, Diane Coyle, Martin Smith and Sam Warner for LSE Blogs.

The authors recalled how, in 1964, the new Labour PM Harold Wilson created the “ill-fated” Department for Economic Affairs with responsibility for driving economic policy, in the hope of “clipping the wings of the Treasury”.

In 1989, Margaret Thatcher and her chancellor, Nigel Lawson, were at “loggerheads” over whether to join the exchange rate mechanism (ERM), recalled The Guardian. The chancellor demanded that the PM sack her own economic adviser, Sir Alan Walters. When she refused, Lawson quit, which unleashed a series of events that ultimately ended Thatcher’s premiership.

With Tony Blair and his chancellor Gordon Brown there was “more than a decade of festering resentment��� between the Treasury and No. 10, recalled Jon Davies, co-author of a book about the Blair years, in The Telegraph.

So “jealous of his perceived terrain” was Brown, said The Telegraph, that in 2000, when the PM announced on TV that Britain would reach the European average for health spending, Brown stormed into No. 10, shouting: “You’ve stolen my f***ing Budget!”

Do they need to be friends?

After Brown finally took over in No. 10 in 2007 he often clashed with his own chancellor, Alistair Darling. Perhaps mindful of the political damage that such tensions caused, David Cameron and George Osborne, who were already friends and godfathers to each other’s children as they settled into No. 10 and No. 11 Downing Street, formed a comparatively positive relationship.

Osborne was Cameron’s “closest ally” in government, said the BBC, and served as his chancellor for the six years Cameron was prime minister – from 2010 to 2016. However, Cameron’s successor, Theresa May, reverted to form and endured a “tense” relationship with her financial colleague, Philip Hammond, said The New Statesman.

During the Covid pandemic, Rishi Sunak’s furlough programme, made the then-chancellor the most popular member of the government – “a status ‘Dishy Rishi’ burnished with slick social media messages that stressed his own brand more than the government’s”, said AP. His Eat Out to Help Out policy also saw Sunak take “centre stage” in 2020, noted the Daily Express.

Ultimately, it was said that Sunak “wielded the dagger” that knifed Boris Johnson in the back and brought about his departure from Downing Street, said The Independent, as another ruined PM/chancellor relationship changed everything.

Why does it matter?

The connection between PM and chancellor is “probably the most important, and potentially the most problematic, of all ministerial relationships”, wrote history professor Richard Toye on the Exeter Blog.

Domestic economic management is “the most important factor in determining electoral success”, wrote Toye. Therefore, the chancellor becomes “a unique point of strength or weakness” for a prime minister. If the relationship goes well and the economy thrives, the PM can feel “fairly secure in 10 Downing Street” but if it goes wrong the consequences can “rock a government to its foundations”.

Getting the balance right is easier said than done for the MP in No. 11. A problem for chancellors is that “if they get too close to the prime minister, then like George Osborne, they become tarnished when the PM is out of favour and the political parties look for a ‘clean break’,” said Tax Journal.

“If, however, chancellors fall out with prime ministers,” then “their careers tend to be cut short by the prime minister”.